Ontario proposes HST rebate for some first-time homebuyers

Some first-time homebuyers in Ontario could soon save thousands of dollars on the cost of a home.

That’s according to a provincial government proposal to lower costs with a sales tax rebate that could save up to $130,000 when combined with provincial and federal saving initiatives.

Ontario’s Finance Minister Peter Bethlenfalvy says the proposal is subject to passage of federal legislation.

“Ontario’s new rebate would temporarily remove the full eight per cent of the provincial portion of the HST for first-time homebuyers on qualifying new homes valued up to $1 million,” he said.

For homes valued up to $1.5 million, there will be partial rebates on a phased-in basis.

Bethlenfalvy says the proposal will save first-time homebuyers up to $80,000 in tax reliefs as a result of the new and provincial rebates.

He says the tax relief will help buyers manage financial challenges in a time where “every dollar counts.”

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While this may be welcome news for first-time homebuyers, Colin Mang, an economist with McMaster University, thinks the tax relief should be extended to all homebuyers.

“What we need are more people buying new homes we need to get construction moving in this province,” he said.

Mang emphasizes the province is a long way from its goal of building 1.5 million homes by the end of the decade.

“We have seen constructions slow down a lot in the past year; construction starts are way below the levels that we had last year around this time,” he said.

“What this incentive is going do – this is going get more people into the market, this is going provide that boost demand to hopefully get builders building again.”

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Meanwhile, Rob Flack, Minister of Municipal Affairs and Housing, says the tax relief is a win-win for all.

“Our mission is simple. We want to get homes built,” he said. “We want to keep workers on the job and we want to keep the dream of home ownership alive.”

In June, the federal government proposed to remove five per cent of HST for first-time buyers..

The new Ontario rebate proposal will be included in next week’s fall economic statement.